1. I only

2. I and III only

3. II only

4. I, II, III only

5. None of the above

36)In country A, 60% of all capital equipment produced is bought by A.ON, a large electricity producer. All import of capital goods is banned. A.ON’s demand curve for capital, then:

1. Must be downward-sloping.

2. Must be perfectly price-elastic in short-run.

3. Must coincide with A.ON’s MRPK curve.

4. Coincides with A.ON’s MVPK curve.

5. More than one answer is correct.

6. None of the above.

37)A risk-free perpetuity bringing $10 annually costs $200 today. Assuming that i, the interest rate on bank deposits (the only other investment opportunity) will stay constant, and the annual inflation rate would stay at 10%, you should only buy it, if:

1. i ≤ 15%

2. i ≥ 15%

3. i > 5%

4. i ≤ 5%

5. You should buy it in any case.

38)Which of the following events would decrease an industry’s demand for capital goods?

1. An earthquake has destroyed much of the country’s capital assets.

2. The new government has abolished all taxes on imported capital goods.

3. A change in fashion has increased the demand for that industry’s output.

4. More than one answer is correct.

5. None of the above.

39)Which of the following statements about capital supply is true:

1. A decrease in demand for capital services would reduce the supply of capital assets.

2. The larger the industry is, the flatter its capital supply curve would be.

3. In the long-run, capital services supply curve would be horizontal for any industry.

4. More than one answer is correct.

5. None of the above

40)Suppose that all the available land in country A is being rented for either housing or farming. If the government started to subsidize wheat production, it would, in the long run:

1. reduce the supply of farmlands.

2. Increase the rental rates for housing land.

3. Increase the rental rates for farmlands.

A) I only

B) I and II only

C) II and III only

D) III only

E) I, II and III

41) Pareto-efficient resource allocation…

1. …can never be achieved in a market economy.

2. …could only be created with government intervention.

3. …is an allocation such that it is possible to redistribute resources and move to another allocation which would make at least some economic agents better off and nobody worse off

4. More than one statement is correct.

5. None of the above.

42)In country A, all teaspoons are produced by a profit-maximizing monopoly. Then, in a market equilibrium, the marginal … benefit of teaspoons must be higher than the marginal social … of teaspoons.

1. Social; cost.

2. Private; benefit.

3. A and B.

4. None of the above.

43)In economic terms, the near extinction of the blue-fin tuna population in the Atlantic is a likely consequence of a…

1. …negative externality in production.

2. …positive externality in consumption.

3. …negative externality in consumption.

4. …positive externality in production.

5. A and C.

44)Some distortion causes good X to be overproduced from the social point of view. That could mean, that in market equilibrium: